Hope for the Future
Sign up on right to get free WEALTH TIP’s Newsletter, and FREE bonus eBook; 20 Minute Guide to Investing! If you like what you’re reading here, sign up for my RSS feed or email subscription and follow me on twitter.
After you are done reading, please stop by American Media Marketplace and check out my latest article, A Decent Return on Savings
Chris Farrell wrote about how more venture capital (VC) is finding its way into the economy in Angels are Returning. Add that to the jam packed malls in Northern California, and I have a prediction.
The economy might be improving.
This unscientific study of mall traffic and VC investing on the west coast just might be a harbinger of sunnier times to come. There’s common wisdom that national trends begin on the coasts. If that’s so, then this might be the beginning of a better economic outlook.
The media is famous for digging out the most salacious and negative information and broadcasting it far and wide. The result of this tactic is twofold; one, broader viewership and two, a decidedly negative economic outlook. This commentary will present data to support the possibility that the economic climate is not as bleak as the media would have you believe.
1. Historically, markets are cyclical-As an Investments Professor at a local university, one of the key concepts in financial markets is that growth is cyclical. Japan’s endless malaise notwithstanding, most modern economies have their peaks and valleys. After a prolonged downturn, it’s more likely that a nations’ economic growth will improve rather than deteriorate. Even though the stock market has been in the tank for quite awhile, over the last century or so, the trajectory of stock prices has been upward, yielding about a 9% annualized return. And over the long term, stock prices mirror the financial health of their underlying companies.
2. Unemployment for those with a bachelors degree and higher is 4.2% according to the Bureau of Labor Statistics September, 2011 report. Thus, the horrific 9.2% unemployment figures pertain more to those with a high school degree or less. Even if you have a bit of college, you have a greater likelihood of being employed than with less educated.
3. Salaries are rising a bit according to Market Watch, Andrea Coombes. Granted the projected 2.7% increases are not much, they are going in the right direction. Salary increases have to start somewhere and once they start going up a bit, a positive salary trend may be in the offing.
4. Major companies are sitting on a bundle of cash. When the balance sheets of major global corporations have cash, it stands to reason that their fundamental outlook is more positive than negative. When companies have cash in their coffers eventually they will use those funds to expand their operations and hire more employees leading to a rosier economic scenario.
5. CNN.com reports that Texas has an abundance of jobs and actually the population can’t keep up with the job growth. So the employment picture is more robust in some areas than others. Unfortunately, this job boom consists of a plethora of minimum wage jobs, many lacking health benefits. So this one might be a mixed bag benefit.
Don’t accuse me of being a Pollyanna and suggesting that everything is just great with our economy. I understand that there are many problems both in the US and abroad, but sometimes it just makes sense to explore the situation a bit more. So, turn off the talking heads for a minute and entertain the possibility that the economy might be improving.
Barbara Friedberg across the Blogosphere
- I’m featured at the Totally Money Blog Carnival hosted by Curb Your Consumerism
- Carnival of Personal Finance at Beating Broke showcased my article Go Beyond Keeping up with the Joneses
- Moneycrashers Give Better Holiday Gifts round up included What Should I Invest In?
What do you think? Are there any positive economic signs in your area?
image credit; toptenlists
